American Express Bluebird review

There’s has been so much hype over the American Express Bluebird card since it came out in November 2012 that I had to try to jump into the game myself.

American Express and Walmart have teamed up to provide a new type of prepaid debit card.  Signing up for a bluebird account is free at www.bluebird.com.  There is no credit inquiry when signing up for a bluebird account since this is not a credit card.

What bluebird is and isn’t

Bluebird is kind of like a checking account in that you can:

• Make direct deposits into your account from your employer
• Deposit checks online with your iPhone or Android device
• Pay bills online 
• Transfer money to your bank account
• Send checks to friends and family up to $5000 for free
• Send checks up to $10,000 per month to listed payees
• Withdraw money at ATMs that accept AMEX cards ($500 per day and $2000 per month) 

Bluebird is kind of like a credit card since it looks and swipes like a credit card.  Bluebird offers purchase protection that provides coverage on your purchase from accidental damage or theft within 90 days of purchase

Bluebird offers fraud protection as well.

Bluebird is not like your traditional bank account since it is backed by AMEX, and not a bank.  You do not earn interest on money sitting in your account.  Funds within your Bluebird account are NOT FDIC insured.  Also, you currently cannot write a paper check with your account.

update 3/26/13: Bluebird is now FDIC insured and you can also write paper checks.

The beauty of having a Bluebird account is that there is a way to load your account with credit card purchases.  

The trick is to look for a Vanilla Reload card.  These prepaid reload cards can be purchased at many CVS locations for a fee of $3.95.  The maximum load that you can do per card is $500, which is what I would recommend.  This makes the credit card load fee only 0.79% per $500 reload card purchased.

Loading $500 from your Vanilla Reload card to your Bluebird account is extremely easy.  You simply scratch off the PIN number on the back of the Vanilla Reload card, and then enter both your Bluebird card number and the PIN number onto the www.vanillareload.com website.  The $500 load happens immediately.

You can load your Bluebird with Vanilla Reload cards up to $1000 per day and up to $5000 per month.

The deal is even better if you have a credit card that gives you bonus points for making purchases at drugstores (CVS is classified as a drugstore purchase).  Currently Chase Freedom and Citibank Dividend credit cards offer 5% cashback on purchases made at drugstores (up to $1500 purchases with Chase Freedom and $6,000 purchases with Citibank Dividend).

With Bluebird, you can use it to pay for many expenses that you normally could not pay for with a credit card.  Such expenses include your: mortgage, loans, rent, friends, and even your credit card bill can now be paid with your Bluebird account. 

Even if your credit card only earns 1x points or cashback on purchases, it may be worth it to purchase Vanilla Reload cards to earn free reward points.

Let’s say you purchase a Vanilla Reload card for $500 + pay the $3.95 activation fee.  Spending a total of $503.95 with a 1x rewards card will earn you 504 points, which is worth more than the $3.95 fee you used to purchase the card.  If you choose to use points earning credit cards, you can quickly rack up thousands of points for little to no out of pocket expenses. 

I’ve been testing out my Bluebird account and in the last two months, I have already successfully paid off my mortgage with Wells Fargo, my car loan with Toyota Financial Services, made a few purchases at Costco and also transferred money straight into my bank account - all without issue. 

I’m not sure how long CVS stores will allow purchases of Vanilla Reload cards with your credit card.  There have been reports on flyertalk that some store managers or employees at certain CVS locations are blocking people from purchasing Vanilla Reload cards with a credit card.

For now, I’ve already made many purchases at several CVS locations around me.  A few times I have been shot down but most of the time I have been successful in purchasing these Vanilla Reload cards with my credit cards.  As you can see, I am slowly building up a collection of these cards.

Your Bluebird account comes with a few fees such as a $2 load fee from a debit card ($100 daily limit) as well as a $2 ATM withdrawal fee (unless you have direct deposit).

Otherwise, there are no annual or monthly fees.  No overdraft or foreign exchange fees.  There are no minimum balance requirements to maintain your Bluebird account.  There are also no fees to transfer money from checking, savings, or direct deposit.

I suggest playing this game slowly, or else you will get shut down.  Most CVS locations won’t let you purchase more than 2 cards ($1000 worth of Vanilla Reload cards) with a single transaction.  I’ve had two fraud warnings when I made multiple CVS purchases on my Citibank Dividend card (Citi sent me a fraud warning text message, which I promptly responded to).  

I don’t recommend buying a Vanilla Reload card, loading your Bluebird account, and then transferring the funds immediately to your bank account.  

I also don’t recommend paying off the credit card bill of the card you used to make your Vanilla Reload purchases.  I suspect these activities could lead you to getting your account shut down.  

I recommend using your Bluebird account the way AMEX and Walmart have intended, like a credit card or checking account alternative.  Make normal everyday purchases on the card and pay some of your bills with it.  American Express really has a great product on their hands with the Bluebird account.  

I will continue to use it as long as I can purchase Vanilla Reloads with my rewards credit card.